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42 J. Ins. Regul. 1 (2023)

handle is hein.journals/jloins42 and id is 1 raw text is: Rebecca Williams, A.C.A.S. Lorilee Medders, Ph.D. David Marlett, Ph.D. Catherine Lattimore David Evans, F.C.A.S. IMPORTANCE Explores the environment for growing private markets for U.S. flood insurance, and recommends state-level policy strategies to encourage these markets' viability and sustainability. OBJECTIVES This study contributes to the literature on flood risk and insurance by (1) exploring the market challenges in the development of private flood insurance; (2) demonstrating the importance of local risk considerations and flexible program features for state-level, private strategies that provide a sustainable framework for insurers to consider; and (2) highlighting the alignment of recent model laws and several state programs with the recommended features. EVIDENCE The federally backed National Flood Insurance Program (NFIP) has provided most of the protection to property owners against flood losses in the United States for nearly six decades. Comprehensive insurance againstflooding would benefit a significant proportion of the U.S. population. Despite the risk, most property owners do not buy flood insurance, leaving the vast majority of U.S. properties uninsured against flood. Low flood insurance penetration is set against a backdrop of significant and increasing U.S. risk of flood. Federal legislators have been unwilling to provide long-term renewal of the NFIP since 2017, instead opting for short-term reauthorizations. The private insurance market has an opportunity to deploy its knowledge and capacity to close the flood protection gap and create more resilient communities. Factors that drive the opportunity include (re)insurer risk appetite, improving knowledge of flood risk and a favorable lender acceptance environment. The goals of the NFIP do not align with the goals of private insurers. While the NFIP is charged with insurance availability and affordability, private insurers are focused on availability at an adequate, risk-based price. FINDINGS If a viable private flood risk market can be established, the NFIP's best future utility is as a market of last resort for residual (primarily highest-flood-risk) properties. Mitigation-inducing, price-to-risk matching (to the extent practicable) is key to a healthy private market, and government-sponsored insurance programs are best limited to otherwise uninsurable risks. If an appropriate policy objective is to build a viable and sustainable private flood insurance market, the states themselves must determine the eco-system that simultaneously best encourages private insurers to